So what, let inflation run it’s course. It’s deflation that’s deadly. The Fed is trying to prevent a labor uprising by trying to suppress prices because they know the government nor corporations will ever willingly raise wages. Sorry but that ship sailed a decade ago.
Inflation primarily hurts investors with large holdings in securities and actually helps those that are indebted. Most Americans are deeply in debt and would be helped by inflation once a union keeps their wages following inflation.
By the standards used to judge inflation in the 80s and 90s wed be closer to 30-40% inflation. Do you know how much our money supply grew as a result of us printing money (which WAS needed) during the COVID crash?
About 30-40%.
Match that against the house market growth and equities. It fits.
Inflation is still a massive threat. Europe is on the verge of a credit crisis… and the world is pinned to the dollar…and the US banking system has been leveraging up anything foreign to balance their books against their losses.
It’s terrifyingly complex and stupid that we let it get to this point. Have you looked at the balance sheets of those banks? It’s bad. We have some gsibs that are under water… and no bank that can feesably absorb them.
It’s deflation that’s deadly. The Fed is trying to prevent a labor uprising…
The fed needs people to lose their jobs. There needs to be wealth destruction to get things under control. This is the reason the fed was initially ramping rates - they stoped when banks started to fail… but they didn’t cut. They can’t. The banks / institutions are literally balls deep in various leveraged carry trades that need the rates to hold steady to be profitable. We cut rates: those leveraged trades collapse and the banks fail. If we raise rates the bonds backing those trades collapse… margin requirements rise and the banks fail. The fed literally is walking a tightrope.
This is the result of not letting the banks at fault for their gambling addictions in 2007/8 suffer.
Sorry but that ship sailed a decade ago.
You aren’t wrong. The problem is we’re on the same doomed ship.
Inflation primarily hurts…
Everyone. Wages cannot keep up with equity growth. Costs are skyrocketing. Layoffs are increasing to defend profit margins. It’s a bubble. We formed it and by god we’re going to pop it. The soft landing isn’t a myth … it’s misunderstood: it’s landing a plane in the Hudson. It’s still a crash and awful but we survive. The alternative is far worse and the fed knows this.
Rate cuts early will lead to stagflation and us revisiting this exact spot far worse off than we currently are.
So what, let inflation run it’s course. It’s deflation that’s deadly. The Fed is trying to prevent a labor uprising by trying to suppress prices because they know the government nor corporations will ever willingly raise wages. Sorry but that ship sailed a decade ago. Inflation primarily hurts investors with large holdings in securities and actually helps those that are indebted. Most Americans are deeply in debt and would be helped by inflation once a union keeps their wages following inflation.
By the standards used to judge inflation in the 80s and 90s wed be closer to 30-40% inflation. Do you know how much our money supply grew as a result of us printing money (which WAS needed) during the COVID crash?
About 30-40%.
Match that against the house market growth and equities. It fits.
Inflation is still a massive threat. Europe is on the verge of a credit crisis… and the world is pinned to the dollar…and the US banking system has been leveraging up anything foreign to balance their books against their losses.
It’s terrifyingly complex and stupid that we let it get to this point. Have you looked at the balance sheets of those banks? It’s bad. We have some gsibs that are under water… and no bank that can feesably absorb them.
The fed needs people to lose their jobs. There needs to be wealth destruction to get things under control. This is the reason the fed was initially ramping rates - they stoped when banks started to fail… but they didn’t cut. They can’t. The banks / institutions are literally balls deep in various leveraged carry trades that need the rates to hold steady to be profitable. We cut rates: those leveraged trades collapse and the banks fail. If we raise rates the bonds backing those trades collapse… margin requirements rise and the banks fail. The fed literally is walking a tightrope.
This is the result of not letting the banks at fault for their gambling addictions in 2007/8 suffer.
You aren’t wrong. The problem is we’re on the same doomed ship.
Everyone. Wages cannot keep up with equity growth. Costs are skyrocketing. Layoffs are increasing to defend profit margins. It’s a bubble. We formed it and by god we’re going to pop it. The soft landing isn’t a myth … it’s misunderstood: it’s landing a plane in the Hudson. It’s still a crash and awful but we survive. The alternative is far worse and the fed knows this.
Rate cuts early will lead to stagflation and us revisiting this exact spot far worse off than we currently are.